Facebook Case Analysis

Facebook, Inc.’s challenge is that they are too invested and dependent on their advertisement revenue. The company’s prime source of revenue comes from web and mobile advertisements and payment and fee from online gift purchases and virtual games (Stevens).

Facebook’s 10k reports that advertisement revenue alone accounted for 89%, 92%, 95%, and 97% in 2013, 2014, 2015, and the first quarter of 2016 respectively (10k). From total revenue, 97% is earned from advertising on social media sites, leaving only 3% that is earned from payment and fees. Our company, Next Level Connections, believe that if the advertising business were to decline or face away from online advertising, then Facebook’s main channel of income will decline. In that moment,

A prolific author and one of the most influential innovation though leaders in the business world, Dr. Robert G. Cooper once said, “The need for product innovation has never been greater. Product life cycles are shorter than ever and new products make your old ones obsolete” (Cooper). Online advertisements is Facebooks only ‘product’ that makes revenue, but soon it will become old and fade away. Then, Facebook will face real risk of decline unless they develop a new product that will reduce their high dependency on ad

The company strongly believes that they have nothing to lose at their current stage. Facebook is clearly doing so well and beating of its competitors including Twitter and Google, that is why they believe that they should not stray from their successful path. However, what the company does not realize is that their success will not necessary live on forever. They need another revenue channel that will constantly bring in revenue when advertisements decline. Facebook is at the top of their game this year, but what about the